I was looking at information about stocks at Nasdaq and noticed that they post information about amount of company stock being sold and bought by company insiders.
Nasdaq explains the value of this information as follows on this page:
Insider trading can give you a glimpse into how confident the managers of the company are in the prospects for the company. If managers are confident in the company, chances are good that they will be buying stock in the company. Anytime you see insiders buying stock, it is typically a good sign.
However it looks to me like sometimes too much is sometimes being read into the insider buying and selling of the shares.
After all it seems that many companies have a rather high level of insider selling but no indication that the stock is somehow tanking.
For example, companies that have had only insider selling (no buying) of shares during the last 12 months include Adobe (ADBE; 66 sells of a total of 10,171,676 shares) and Computer Sciences Corporation (CSC; 109 sells of a total of 1,027,384 shares).
Neither of these companies seem to have been on a major downturn trajectory during the last 12 months.
So to get a better idea of the potential value of this information, I wanted to ask these questions about the "Transaction Type" and "OwnerType" column data:
- The "Transaction Type" column often has values such as "Automatic Sell" and "Disposition (Non Open Market)". What is the meaning of these two terms, and how does the term affect how the particular trading activity should be viewed?
- The "OwnerType" column seems to only have either the value "direct" or "indirect". What kind of situation would lead to an "indirect" selling of shares?